Chapter 4: Collaborating in economic development

Collaborating in economic development

Collaborating with other communities or industry can provide advantages for your community’s economic development efforts. This chapter will discuss the potential benefits of working in collaboration with external partners, and how economic development relationships and collaborations can be structured and formalized.

Collaborating with other communities

Building relationships with economic development staff at other First Nations or in municipalities creates a network for sharing information and promising economic development practices. Many communities with experience in economic development are willing to assist and mentor growing communities in earlier stages of development.

We have relationships with other First Nations with an open door policy whereby people give us information and we share information with other First Nations on projects… We would go to other First Nations for advice and we’ve been mentored when we were working on a project.²

Vaughn Sunday, former Director of Economic Development, Mohawk Council of Akwesasne

Beyond information sharing, it can be advantageous for multiple communities to collaborate on economic development projects. This could mean initiating new projects together or aligning existing projects through business agreements. Pooling communities’ financial and human resources, unique skills and expertise, and access to different markets can create new opportunities that would not be feasible for individual communities working alone. Working in collaboration can also create cost advantages. For example, multiple communities working together may be able to obtain better purchase prices from suppliers, lower their costs per item, share administrative costs such as advertising and jointly invest in costly technology and research and development. Additionally, working with other communities may improve communities’ ability to access and leverage new funding to support a project.

First Nations at all levels of development can reap the benefits of collaboration, from high-capacity communities looking to take on large-scale, regional projects to smaller communities that may not yet have the capacity to move an economic development project forward individually.

Lac Seul First Nation and Kitchenuhmaykoosib Inninuwug partnered with the municipality of Sioux Lookout to work towards the development of a Regional Distribution Centre (RDC) through the First Nations-Municipal Community Economic Development Initiative (a joint initiative of the Federation of Canadian Municipalities and the Council for the Advancement of Native Development Officers). The RDC, which would operate as a non-profit social enterprise, is intended to serve as a central distribution point for fresh foods and consumer goods for up to 31 northern communities, and help address the limited access to fresh and nutritious foods and other basic goods faced by communities in the region. The RDC is anticipated to be operating at full capacity in spring 2018. Find out more about the initiative on the Federation of Canadian Municipalities webpage.

The collaborative relationship between First Nations in the region and the municipality of Sioux Lookout is supported by the Sioux Lookout Friendship Accord, a principle-based relationship agreement originally signed between Lac Seul First Nation, Slate Falls First Nation and Sioux Lookout. The Friendship Accord has since expanded to include Cat Lake First Nation and Kitchenuhmaykoosib Inninuwug. The Friendship Accord, which the First Nations and Sioux Lookout developed through the Federation of Canadian Municipalities’ Community Infrastructure Partnership Program, provides a framework for agreements and partnerships between the First Nations governments and the municipality.

Stronger Together: A Toolkit for First Nations-Municipal Community Economic Development Partnerships, released by the Federation of Canadian Municipalities, is a comprehensive resource that includes stories and lessons learned about joint First Nations-municipal community economic development. The Government of Ontario document Municipal-Aboriginal Relationships: Case Studies provides five case studies of successful relationship building between Indigenous communities and municipalities.

With multiple partners, it is extremely important to ensure that the scope of the project and roles of the various partners are clearly understood so they all own it and are accountable to each other, and the sense of ownership and responsibility is shared.

Kevin Eshkawkogan, CEO, Great Spirit Circle Trail

Collaborating with industry

Communities may also build relationships and collaborate with businesses, from those in the community to regional, national and international business partners. Collaborating with industry can provide similar benefits as collaborating with other communities: sharing of knowledge and resources, creating new, mutually-beneficial economic opportunities, accessing new markets and obtaining cost advantages.

We have a very effective relationship with Glencore. We share our local knowledge of the environment with them and they share their technical expertise with us, so we can enhance our skills and expand our business beyond our watershed. We view our relationship as a tool for economic development of our human resources, rather than just simply our natural resources.³

Cheryl Recollet, Director of Sustainable Development, Wahnapitae First Nation

As mentioned in Chapter 3, doing your due diligence on any potential partner, whether it is another community or industry, before formalizing any relationship or collaboration on an economic development project can help you make an informed decision on whether they are right for your community and the project under consideration. Due diligence can include building a relationship with the potential partner and getting a sense of their values, principles, business philosophy and business practices and what value they can bring to the project. You may also want to find out more about past projects they have been involved in, including projects similar to the opportunity under consideration; learn about their environmental record; ask to speak to their past business partners, customers or staff; ask to review financial statements or have a lawyer review any legal matters.

There were 22 companies at one time wanting to be partners with us. With so many opportunities, you need to be clear on what your goals are and do your due diligence on who could provide a legitimate partnership. It was a lengthy process, and the due diligence is reciprocal. The companies want to know and be assured the community has the capacity and experience. Chippewas have been in business for over 40 years; we have a mature business track record and now we do business with companies from all over the world.

Tom Maness, former General Manager, Chippewas of Sarnia Industrial Developments

Large-scale commercial and industrial projects on reserve lands: The First Nations Commercial and Industrial Development Act

Your community may be interested in engaging in large-scale commercial or industrial development projects on its reserve lands, which may involve working with outside investors and industry. A lack of regulations on reserve lands for these kind of development projects, such as environmental and health and safety regulations, can cause regulatory uncertainty that may discourage potential investors and limit these economic opportunities.

The federal First Nations Commercial and Industrial Development Act (FNCIDA) enables the federal government, at the request of participating First Nations, to produce regulations for complex commercial and industrial development projects on reserve lands. FNCIDA allows regulations to be adopted on a project-specific basis on reserve that are compatible with the existing provincial regulations off reserve. This compatibility increases certainty for the public and developers, and assists these kinds of projects in proceeding. Participating First Nations, the federal government and the province develop the regulations in co-operation. The federal government may delegate monitoring and enforcement of the regulatory regime to the province through an agreement between the participating First Nations and the federal and provincial governments.

Resolute Forest Products’ sawmill in Thunder Bay is situated on Fort William First Nation reserve land. A federal regulation made under FNCIDA sets out how 12 Ontario statutes apply to the regulation of this facility. Find out more about FNCIDA on the Indigenous and Northern Affairs Canada FNCIDA webpage.

Make sure your structure and leadership is stable before entering into large development projects. Your corporate structure, momentum and legal agreement should all be in place before pursuing partnerships. If those are not in place, you risk losing out on big deals.

Randy Restoule, Community and Economic Development Officer, Dokis First Nation

Structuring collaborations in economic development

There are a number of ways that economic development relationships and collaborations between your First Nation, economic development entity or community businesses and external partners can be structured. You may wish to engage legal and financial expertise when considering entering into any agreement.

Memorandums of understanding

According to the Guide to Community to Community Forums in British Columbia, a memorandum of understanding “puts in writing the intent of communities to work together on an issue of common interest.” While memorandums of understanding (MOUs) are generally not legally binding, they can confirm a relationship and shared goals, define expectations and responsibilities, outline a process for working together and provide direction for communities’ staff – laying the groundwork for positive collaboration or a more formal relationship in the future. MOUs, which may also be called protocols or accords, can be appropriate for outlining relationships with other communities or industry. You can find a sample MOU on page 31 of the Guide to Community to Community Forums in British Columbia, or view the Sioux Lookout Friendship Accord as another example.

Business agreements

Collaborating with an external partner on an economic development project may require entering into a more formal arrangement, such as a joint venture agreement or a partnership agreement. These kinds of agreements have broad definitions and can take many forms.

In a joint venture agreement, two or more parties agree to share a defined amount of financial and human resources to take on a specific project. Joint venture agreements may create a new organization jointly owned by the signatory parties, such as a corporation, or the parties may agree to conduct business together without the creation of a new organization. Joint venture agreements generally outline roles and responsibilities, project objectives, the contributions each party will make to the project, how ownership will be structured and how liabilities, expenses and profits of the project will be divided.

The Terrace Economic Development Authority created the First Nations Joint Venture Partnership Toolkit to assist British Columbia businesses interested in entering joint ventures with First Nations communities. This toolkit contains template documents that you may be able to adapt for your specific situation, including a template term sheet, which outlines terms for both parties to consider when negotiating a joint venture agreement, and a template joint venture agreement.

We held an economic development forum recently and had all of our Joint Venture (JV) partners, bankers and funders attend. We showcased our work. We want to diversify. We used to be heavily focused on mining, but not everyone wants to be a miner. We want our JV partners to support our other businesses, we want to maximize the gross and net profits of our JVs and, where appropriate, we are starting to convert the JVs into equity ownership. This means we invest our own money into our JVs; we have ‘skin in the game.’ It means we sit on the board, we make decisions [and] we get a part of the profits. This is much better than just receiving some money at the beginning of a short contract and a few possible jobs for members. Having equity ownership makes Wahgoshig Resources Inc. (the company that manages all of the agreements) a more robust company.

Allen Kanerva, Senior Economic Advisor, Wahgoshig First Nation

Similar to a joint venture agreement, in a “partnership” agreement, two or more parties agree to jointly own and carry on a business for profit. However, while a joint venture agreement is scoped to a specific project, a partnership agreement is broader in purpose and generally has a longer intended lifespan.

In a general partnership, each partner shares management responsibilities and can be held jointly or potentially individually responsible for any debts or liabilities owed by the partnership. In a limited partnership, there is at least one general partner and at least one “limited” partner. The general partner actively runs the business and is responsible for the partnership’s debts and liabilities. The limited partner invests in the business and can share in the profits, but cannot be held personally responsible for the partnership’s debts and liabilities. However, a limited partner must be a “silent partner.” This means they cannot take an active role in managing the business, or they can be considered a general partner and therefore be held responsible for debts and liabilities.

The partner (for our hydro project) and Dokis First Nation entered into a Limited Partnership Agreement. The structure of the corporation is completely free from political influence as Chief and Council are not members of the board. This assures stability for the corporation, while attracting partners and investors into a structure of good governance.

Randy Restoule, Economic Development Officer, Dokis First Nation

Impact and Benefit Agreements (IBAs)

According to the Gordon Foundation’s IBA Community Toolkit, an IBA is “a contract made between a community and a company that provides Aboriginal consent or support for a project to proceed.” These kinds of agreements, which may also be known as benefits agreements, participation agreements or resource development agreements, are generally seen in the resource development sector. If a community agrees to negotiate with a company, an agreement is reached and a project proceeds, IBAs can ensure that benefits flow to the community and negative impacts of development are minimized.

Agreements often include financial benefits and education, training and employment opportunities. Agreements can also set out how the community and company will communicate during the lifetime of the agreement, environmental management provisions, and protection or mitigation measures for cultural resources.

As an example, Mattagami First Nation, Wahgoshig First Nation, Matachewan First Nation and Flying Post First Nation have signed a resource development agreement with Goldcorp for Goldcorp’s existing and future mining operations in the Timmins area. This agreement includes provisions for training, employment, business and contracting opportunities, a consultation framework for regulatory permitting, and scholarship and bursary opportunities for youth.

The Gordon Foundation’s toolkit provides more information on these kinds of agreements, and their negotiation and implementation. The toolkit focuses on mining, but can be adapted for other resource development contexts.

We have to get out of the ‘divide and conquer’ mentality as First Nations. What Goldcorp did in our region was it created a regional development corporation and each of the four First Nations within the region of their operations were given 25% ownership and one seat on the board. Goldcorp funds this. It’s a good model because a regional company will be on more contracts on behalf of four communities than if each of the four communities had their own company.

Allen Kanerva, Senior Economic Advisor, Wahgoshig First Nation

If there is interest for some development in or around your community, and a duty to consult, that project should fund the capacity for the community to engage third party expertise that will conduct the necessary work, but also act as a mentor for the staff of your community to learn the process along the steps of the project.

Matt Jamieson, President and CEO, Six Nations of the Grand River Development Corporation

Case study

To discover how eight First Nations worked together to create a successful regional tourism company called the Great Spirit Circle Trail, see the “Case studies” section of this guide.

Recap

• Collaborating with external partners on economic development initiatives can enable sharing of knowledge, pooling of resources and expertise to open up new economic development opportunities, and securing employment and training opportunities for your community.
• Economic development initiatives can be undertaken with a variety of partners, from other First Nations, to municipalities, to businesses at the community, regional, national and international levels.
• Agreements with external partners can be formalized in a number of ways, such as Memorandums of Understanding, business agreements and benefits agreements.